This recent selloff in gold is a fantastic buying opportunity. What the Fed is saying is the economy is in such bad shape that they will need to keep rates near zero for years to come. They will also need to keep expanding their balance sheet as few other than the Fed wants to buy the debt. This is a dream scenario for gold.
All the Fed can do is talk to try to sway the markets, and let’s not fool ourselves that is the primary mandate. Whether they say it is or not, actions speak louder than words. Since the 2008 economic debacle, their actions have been to prop up the markets, because their stimulus efforts have done very little for the economy but, it has driven stocks to record highs.
Doing all that comes with a price, a price that will be paid for a generation or two. Debt has gone into overdrive and has put the Fed in a corner they can’t get out of. They can’t lower rates below zero, and they can’t raise rates because with the extreme debt levels, any increases will stop economic growth.
The foundation of the Fed’s issues really started when the US went off the gold standard. It put some real checks and balances on the central bank and government. Since then it has been all money printing like it is going out of style and debt growth.
Economics have a way of fixing these kinds of issues. These actions have set up a perfect storm for a golden era and a return to some for of a gold standard.
My preferred way to play the golden era is to buy gold in the ground through high growth miners, mine developers and exploration stocks. It is where I have an advantage as I have spent nearly 30 years in the exploration industry. I also believe it is where you will get the biggest bang for your buck.
If you are looking for ideas, look at the recent blog posts and our Rocks And Stocks Index. The index is full of the companies that I have picked over the past couple years, it is a fantastic shopping list for gold in the ground stocks.
All the best,
The reports are for information purposes only, before making any investment decisions it is important to speak with your financial advisors and do your own homework on the companies.